Manhattan's largest office landlord's goal of selling $2.5B of assets this year is at risk of coming up short as a rapid increase in borrowing costs could push some deals into 2027.

SL Green has benefited from the city's most active office market in decades, with its occupancy up to 95% and 2M SF of leases signed so far in 2026. At its existing buildings, tenants are agreeing to pay roughly 15% higher rents than what the spaces were charging before.

But for a company with nearly $4.3B of debt, surging interest rates have been a “drag on earnings,” SL Green CEO Marc Holliday said on a Thursday afternoon call with analysts.

“Higher rates impact all real estate businesses, and most every industry, and we're talking about a swing of about 150 basis points throughout the year, up from the already elevated levels at the beginning of the year,” Holliday said.

The company offset any interest-related negative impacts on its performance in the third quarter with a surprise transaction: SL Green sold a 20% stake in its $200M food and beverage business, collecting $40M. The deal allowed the company to raise its guidance on funds from operation — a key metric of REIT cash flow — for 2026 from $5.60-$5.90 per share to $6.50-$6.70 per share.

SL Green's stock was up more than 6% late Thursday afternoon on the heels of the boosted guidance and beats on revenue and earnings.

The guidance boost would have been 25 cents per share higher had it not been for higher-than-expected interest rates delaying deals and eating into cash flow. The company had set a goal before the year of selling 11 assets for $2.5B combined, and while six of those deals have been completed or announced, some are now expected to close in 2027.

“The timing of those dispositions definitely plays into our revisions,” Chief Financial Officer Matthew DiLiberto said on the call. “Things are taking longer.”

When analysts on the earnings call asked follow-ups on that commentary, Holliday and Chief Investment Officer Harrison Sitomer pushed back on the idea that plans were changed or delayed. 

Holliday noted that SL Green has refinanced loans for $7B — including a just-closed $2B mortgage at 245 Park Ave. — and sold $1B of assets even amid the more challenging environment.

“This is ferocious performance in my book,” he said. “There's more to come. We're not throwing in the towel on anything.”

While Sitomer said “nothing's delayed” with the asset sale plan, he acknowledged that two assets SL Green just started marketing will experience “some pricing discovery” with the higher rates.

“Tolerance is being tested by both buyers and sellers,” he said.

The company is in the demolition stages for its next ground-up office development at 346 Madison and expects to enter the city's rezoning process in December and deliver the tower in 2031, Holliday said. Its other major project in the pipeline is the conversion of 750 Third Ave. into apartments, which is in the midst of interior demolition and has done “most or all of the internal column strengthening successfully and without incident,” Holliday said.

SL Green expects to close on a $500M construction loan for the development and deliver in 2029 with some of the highest rents in Midtown East.

“For me, I think it's a signature project for this company, because it really shows the ability to adapt a building that was a strong office performer since our acquisition back in, I think, 2003 or so, into what will become an even better multifamily project,” Holliday said.

One weak spot in the earnings report was the Summit observation deck business, which launched five years ago at One Vanderbilt and is expanding to Paris and Tokyo. Its operating losses widened in the third quarter with the build-out of the Paris location and slower-than-expected tourism to New York this year.

“We are below our initial expectations, and you have seen that through the first three quarters of the year,” DiLiberto said. “We are off a bit, but we are mitigating what revenue losses we are seeing through reduced attendance through cost containment.”